Chart of the week: America’s butter mountain

US butter price chart

Spot butter prices in America hit a record peak above $3 a pound in 2015, but now they are falling. Butter has gone through a typical pattern for soft commodities: strong demand and higher prices prompt a jump in production, resulting in a glut and falling prices.

After 2012 demand jumped as anti-fat diets went out of fashion and people started buying butter again. Consumption reached a 40-year high. Producers diverted resources from other dairy products to meet demand, says Chelsey Dulaney in Barron’s.

Now stockpiles are up 52% from a year ago and close to a 23-year high.

Viewpoint

Chinese real estate is cocking a snook at Alan Greenspan’s lament that bubbles are impossible to spot. Rapid appreciation, check – property prices are up one-fifth since last year. Crazy market distortions, check – in one-tenth of land auctions in the past year, prices were above those for finished apartments nearby. Expectations of future gains, check – if property prices stay flat, developers will lose money on one-quarter of land bought in the last year. Credit fuelled expansion, check – mortgages account for 70% of all new lending. Deteriorating fundamentals, check – slowing urbanisation, wage growth trending lower. “Really, Alan?”

Deutsche Bank

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